The Guidance Tool

Project-Level Guidance

Land-based investment projects appear in many shapes and sizes. They are
planned to produce agricultural, forestry, and mineral products, among
others. Each sector presents special land and forest tenure
characteristics5 and each project will require a certain
amount of land to produce the resource, house workers, and transport
goods out of the project site. In all circumstances, land access, use
rights, and management rights must be negotiated with a counterpart that
holds those rights. The Interlaken Group has developed guidance
according to the five project types that are most likely to be initiated
by a company making land-based investments. Each project type has
certain characteristics that distinguish it from the others.

Below
are key considerations related to the VGGT for the five project
types:

Project Type

Consideration

Greenfield

No prior due diligence:
In a greenfield project, no prior due diligence has been completed on
land and forest rights in the project area. A company’s due diligence
process must be thorough and comprehensive to understand the legitimate
tenure rights that exist in the project area. Greenfield projects have
the most freedom to find new ways to engage host communities and the
government in the site selection for a project and in the production
model design. At the same time, a greenfield project can be abandoned or
moved to a new location where the tenure situation is clearer or more
equitable at less cost than other project types. In some cases,
government agencies will expropriate land from communities to make it
available for new investments. Companies must therefore complete a
thorough due diligence process to ensure that the land was expropriated
according to international legal standards and the VGGT.

Brownfield

Existing operational model:
Brownfield projects are implemented in an area where a previously operational production
model exists or existed. Generally, the previous operator has already negotiated land
and forest rights. In such a circumstance, the new operator interested in acquiring the
brownfield site must conduct its own due diligence related to tenure in the area. The
operator must also perform a retrospective analysis to understand what issues the
previous operator encountered related to land and forest tenure rights, who granted the
concession, and what types of compensation were provided to communities affected by
the project. In brownfield sites, local communities may hold longstanding grievances
against the previous operator that could affect the new operator’s relationships with the
communities. Since the VGGT were published in 2012, it is likely that the previous operator
did not conduct due diligence that meets the standards of the VGGT. In this situation, the
new operator still has the option to look elsewhere for their project site.

Existing Holdings

Re-engaging communities:
When a company undertakes to implement the VGGT in its existing project, it is likely to
uncover land and forest rights issues that did not appear in the initial due diligence.
Companies are expected to thoroughly review prior Environmental and Social Impact
Assessments (ESIAs) and Human Rights Impacts Assessments (HRIAs), the contracts
they have in place granting their land access and the compensation they made to
host communities. Companies might use this process as an opportunity to re-engage
neighboring communities and identify new ways to augment their production through the
inclusion of local household/community production models. In this circumstance, it is
unlikely that the operator will move operations given the considerable cost it would face.
At the same time, the company must face the reality that the expenditures made to remedy
past mistakes related to land and forest rights might decrease the project’s return on
invested capital.

Joint Ventures or M&A

Acquiring existing land holdings or working with local partners:
Gaining land and forest rights through a joint venture with a local company or through
a merger/acquisition where the acquired company had previously negotiated the tenure
rights poses particular challenges for a company aiming to act consistently with the VGGT.
In many developing economies, local partners can acquire land and forest rights through
political connections that do not respect the international standards for land acquisitions
reflected in the VGGT. Companies engaging in joint ventures with local partners or
acquiring companies with existing land holdings must therefore conduct retrospective
due diligence on the process used to acquire those rights. A company can choose to
abandon the joint venture or acquisition if it discovers especially egregious violations of
the VGGT, but it can also use the negotiation process to remedy past violations and put the
operations on a new footing that respect the tenure rights of the host communities.

Procurement / Supply Chains

Engaging suppliers who impact land and forest tenure rights:
For companies that purchase raw materials from suppliers that own or lease land
and forests, adhering to the VGGT will mean engaging their suppliers in a dialogue on
improving their respect for legitimate local tenure rights and human rights. In some
cases, the supplier will have taken steps to adhere to the VGGT independently; in other
cases, the supplier might require some assistance or encouragement. Large purchasers of
commodities can develop policies based on the VGGT for their procurement teams to audit
their suppliers. Suppliers might also be required to meet certain standards before entering
into contracts with the purchasing company. The multitude of suppliers makes compliance
more complex, but companies may want to change suppliers should the standards not be
met. Ensuring full traceability in a company’s supply chain can help the company track
how its suppliers impact local tenure rights.

See Annex 4 for key considerations for agricultural and plantation forestry land.

The Interlaken Group receives steering support from the Rights and Resources
Initiative, a global coalition of 15 core Partners, 7 Affiliated Networks, 14 International Fellows, and
more than 150 Collaborator organizations engaged in forest and land policy reform in Africa, Asia, and
Latin America.

Disclaimer:
The content presented here reflects the consensus from the Interlaken Group process,
but it may not necessarily reflect the views,
policies or commitments of the individual participants or organizations active in the Interlaken Group.